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- In a note on Thursday, the research house maintained its "buy" call on the REIT following its acquisition, with a higher fair value (FV) of RM1.26 per unit (previously RM1.11 per unit) after reducing the three-year beta in the equity cost for its revised weighted average cost of capital (WACC) of 7.6%, reflecting improving sentiments in both the Malaysian and Australian hospitality segments.
KUALA LUMPUR (Feb 8): AmInvestment Bank Research expects YTL Hospitality REIT’s recent acquisition of Syeun Hotel in Ipoh to contribute a minimum net property income (NPI) of RM3.4 million to the group — representing only 1% of YTL REIT’s FY2024F NPI — based on a property yield of 6.1%, derived from the average property yield of its Malaysian assets.
In a note on Thursday, the research house maintained its "buy" call on the REIT following its acquisition, with a higher fair value (FV) of RM1.26 per unit (previously RM1.11 per unit) after reducing the three-year beta in the equity cost for its revised weighted average cost of capital (WACC) of 7.6%, reflecting improving sentiments in both the Malaysian and Australian hospitality segments.
“We maintain our forecast for now pending further clarification on the details of the variable rental arrangement. This includes details such as the fixed rent and portion of variable component,” AmInvestment Bank added.
On Thursday, the group announced that it had entered into a conditional sale and purchase agreement to acquire Syeun Hotel in Ipoh for RM55 million, cash, comprising a 48,857-square-foot (sq ft) parcel of 999-year leasehold land and a 290-room four-star hotel.
The acquisition also includes the plant and machinery, operating equipment (including all generators, air conditioners, lifts and escalators), office equipment, operating assets, furniture, fixtures and fittings.
Upon completion in 2HFY2024, YTL REIT will lease the property to a hotel operator within the YTL group under a variable rental arrangement, which will allow it to participate in the income to be generated from the property.
According to AmInvestment Bank, the acquisition will be wholly funded by borrowings, with YTL REIT’s FY2024F debt-to-asset ratio inching up to 0.43x from 0.42x upon completion of the acquisition.
“We view this acquisition positively, particularly due to its strategic location as well as the variable component, which positions YTL REIT to capitalise on the anticipated resurgence in tourism activities in Malaysia,” the research house added.
YTL REIT shares remained unchanged at RM1.17 at the time of writing. Its market capitalisation stood at RM1.99 billion. The stock has risen 13.59% year to date and 17% over the past year.
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